When determining the cost of a bad hire, there are three key items to consider: time, money, and energy.Have you ever hired a candidate but after about 6 months you realize it’s not going to work out? Approximately 74% of employers have done this, too. It’s costly to hire, fire, and re-hire again. The U.S. Department of Labor estimates 30% of the first year’s salary, while according to a CareerBuilder Survey, a bad hire can cost a company nearly $15,000. But the true cost of a bad hire is much higher.
When determining the cost of a bad hire, there are three key items to consider: time, money, and energy.
Waste Time You May Not HaveYou’ve probably spent hours during the hiring process reviewing resumes, interviewing candidates on the phone and in person, and negotiating the job offer. The candidate has been hired and trained but isn’t quite up to par. This creates a problem for you, the employer. Do you replace the employee or do you continue to manage their performance and hope for improvements? You may not have time for either option and now, you’re scrambling.
Costs the Business MoneyThe saying goes, “Time is money.” Employees get paid for their work. The longer a bad hire works for your business, the more money it’s costing you. The cost is variable depending on the position and salary. The higher the position and salary, the higher the cost.
Impacts Productivity and MoraleWhen one employee’s work isn’t up to par, the responsibility falls to the rest of the team. Their time and energy are spent fixing issues instead of working on their own tasks. They have double the work and no recognition or breaks. As employees start to suffer from burnout, resentment builds and morale falls. If the problem goes unchecked, they are more likely to find a job elsewhere and leave the company.
A bad hire not only costs money, but time and energy as well. It takes time to review resumes, interview candidates, and train the new hire. The longer the employee stays at your business, the more money you’re spending on them. If their work doesn’t meet the company standards, other employees are left picking up the slack. In extreme cases, this can cause employees to leave the company. Overall, the true cost of a bad hire equals time, money, and energy.
Hiring Team wants to help you save money and time. See what we can do to help hiring go smoothly and how we can help you avoid a bad hire. Schedule a call with us today!